Digital lender OakNorth is pushing forward with its US expansion with the acquisition of Michigan-based Community Unity Bank (CUB).
The London-based fintech has been looking to expand its presence across the Atlantic, having received authorisation last year to market its products in the US via a representative office in New York.
OakNorth is taking its US activities further with the takeover of CUB, an FDIC-insured bank launched in 2022 that gives it a strong American foothold in Oakland County, Michigan.
OakNorth, which primarily provides lending to mid-sized enterprises, has lent as much as $16bn since its launch in 2015.
The company said CUB has already established strong relationships with businesses in its local area, providing its new owner with access to hundreds of thousands of SMEs in Michigan and a launching point for further expansion across the country.
OakNorth CEO Rishi Khosla said there has been a gap in financial services for lower mid-market businesses in the US, particularly following the collapse of several notable American banks in 2023 – including Silicon Valley Bank, which served a large portion of the tech startup industry.
This presented an opening for Khosla to provide funding for US startups, which OakNorth will do via its new American entity.
“Demand from US borrowers continues to be exceptionally strong and our differentiated offering and unique approach to lending has enabled us to rapidly establish a strong presence in the US market,” Khosla said.
“As a founder-led business built by entrepreneurs, CUB appealed to us as it shares a lot of our same values with regards to customer experience. These values are reflected in its customer feedback, as well as its strong company culture.”
According to OakNorth’s latest accounts, the company’s continued expansion into the US has driven a profit boost of 16%, with the company netting £157.8m at the end of December 2024 after tax.
“As business owners and executives, we know that access to capital means everything, and CUB was started to meet that need, assembling a team experienced at lending during both up cycles and down cycles,” said CUB CEO Greg Wernette.
“With an entrepreneurial focus at our core, and every team member striving for customer delight, we are very excited to be joining forces with OakNorth to support an even greater number of US businesses together.”
Following the acquisition, Wernette will serve as chief executive of OakNorth’s US bank.
The move comes amid a wave of British fintechs desperate to crack the US. While much of the industry agrees succeeding in America will provide a massive source of income, the regulatory landscape is notoriously complex, requiring approval from more than half a dozen regulatory bodies.
Acquiring a US bank provides a shortcut for European businesses as the targets have already overcome these regulatory hurdles.
Last year, London-based fintech ClearBank expressed interest in acquiring a US bank for the same reason.
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